Debt of any poor Indian can be waived off, provided he accepts this condition

The poor will be cautioned against availing this offer that would cost the exchequer Rs 20,000 crore under a proposed IBC reform

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New Delhi: Bureaucrats have prepared a blueprint of debt waiver scheme of small companies, marginal farmers and artisans in the country. It will be presented before the next government for implementation — regardless of which party or coalition comes to power. This would, practically, waive off the repayments owed by almost the entire population of poor in India.

According to a report published in The Economic Times, people with a fixed income and property limit will be eligible for this loan waiver. Under this scheme, individuals with an annual income of Rs 60,000 or less, an outstanding debt of Rs 35,000 or less and people with assets of Rs 20,000 or less will be eligible for this scheme.

Company affairs secretary Injeti Srinivas told the newspaper that the proposal would be presented before the next government for implementation. He said that a separate team could be formed to look into the applications of debt waiver and decide on them.

Srinivas said further that if anyone did not want to take advantage of this scheme, he or she would be free to do so. This is because the creditworthiness of the person would be affected if he or she seeks a debt waiver. Those who avail the scheme may find it difficult to get loans in the future, the bureaucrat cautioned. “That’s why we will keep this option in our plan,” he said.

Srinivas said that this scheme would cost up to Rs 20,000 crore, while it will benefit lakhs or crores of people. This will be an important aspect of the changes that are being considered in the Insolvency and Bankers Code (IBC).

The bureaucrat said there were no separate rules for small borrowers in the bankruptcy Act at the moment. He said that the personal insolvency chapters of this law need to be changed.

Srinivas said that there were many such borrowers who were poor. For them, the existing corporate insolvency resolution process is very strict. Crores of people are coming under the purview of this law and no system can handle such a large number of cases. The company affairs ministry is confident that it will prepare the plan within three months.